How to INTRINSICALLY Lower Healthcare Costs for the Majority - an Apolitical & Brutally Honest 1st Principle Approach

Disclaimer: 1. Anything related to ideologies or politics will not be discussed herein, as those are not the focus of this article. 2. Do not treat my analysis or prediction as any form of financial or investment advice, as I'm not a FINRA licensed financial advisor nor do I solicit clientele relations online or offline. 3. If you want to argue by quoting "fact check" sites, this is not the article for you as there is not such a "fact check" authority in the US, and all the so called "fact check" sites have money and political agendas behind them. 4. If you want to discuss detail or nitty gritty "proofs" or quotations with me please do it in private messages, as I don't write this for a living nor am I interested in academia. 5. If you want to ask me how I reached these conclusion, my methods, or my sources, it's not important as only results matter, at least in my opinion, but I absolutely have no time to waste for fiction. 6. If a paid role is on the table, any of the above 5 points can change.

First of all, to start reading the rest of the article, you must agree with me regarding the following 3 points, to which I trust that most of the American people would agree:

1. The Affordable Care Act or ObamaCare is not functioning well, nor does it lower healthcare costs for the majority of Americans.
2. People need affordable healthcare, private or public is not important, but there must be solutions to it in this country just like every other problem in the world.
3. Results matter more than politics or ideologies.

If you agree with the 3 points above, I also wanted to add that the approaches mentioned in this article will not likely become the reality, not because their intrinsic practicality but because corporate (insurance, pharmaceuticals, legal and other sectors) interests and bureaucratic politics that hold this country back. Let's face a few facts and flaws in the ObamaCare regarding why it does not work well, with the following 2 main points:

1. The ObamaCare does not INTRINSICALLY (I used the capital letter in the title for this exact purpose) lower healthcare costs, nor would it ever, without significant changes, whether it's called ObamaCare, TrumpCare, BidenCare, or WhateverCare. The ObamaCare includes 3 key components: 1. Individual Mandate; 2. Insurance and Corporate Mandates, such as banning "precondition exclusion"; 3. Exchange, Cost Sharing and Government Subsidies. It is not difficult to realize that every part of the ObamaCare does the same thing -- Moving money from the left pocket to the right pocket, or in nicer words, what people call "wealth redistribution". The undeniable fact is that neither "moving money from one pocket to the other" nor "wealth redistribution" intrinsically lowers the costs of healthcare for American citizens. Of course not, whether it's from subsidy which is from government taxes, or from "other people", it only changes the sources of budget but does not lower the INTRINSIC costs. This is by far the #1 reason why ObamaCare does not work well. Worse, ObamaCare increased healthcare costs by a lot because it had to spend a large budget to hire a lot of government administrative staff, to build government websites and databases, and other intermediate components that do not cure any patient. As we know, these extra costs eventually all pass onto civilians. Not only it does not make it more affordable it intrinsically makes it more expensive in total for the American society. The least expensive ObamaCare plan costs over $1,000 a year, with a $12k deductible. What's that gonna do? I'll call it what it is -- it's a piece of garbage for the vast majority of the insured. It doesn't help the young and poor, and it doesn't help the middle class, or the wealthy and old. The only people it helps are: 1. Old and poor; 2. Poor of any age who got severely sick, which is tiny likelihood for the majority.
2. The Individual Mandate is Unconstitutional, or at least very unpopular. Per basic common sense in economic theories, a good system would be loved by clients and consumers without the need of force or mandate. If it has to take an "individual mandate" to force people to "have insurance" likely it's something most people do not like. Forcing people to buy something the government sells that people don't like, is obviously unconstitutional and unamerican. Some compare the ObamaCare Individual Mandate with Drivers Insurance, which is a fallacy in my opinion. Driving is not a fundamental right of a person, and thus to drive is a choice. Every choice comes at a cost, and thus mandating Drivers Insurance is constitutional and welcomed by almost all people. Unlike the driving, to live is not a choice, and thus Individual Mandate is forcing a person to buy something for mere survival, or with the financial penalty if the person refuses to purchase something for being merely alive. Like the Democratic Party, some argue that "healthcare is not a privilege but a right". True, but I don't think anyone in this country is denied to have the right of receiving healthcare treatments, not even the death roll prisoners. However, the right to healthcare does not mean the right to healthcare for free or for an arbitrary cheap price the person wants, just like eating food is a human right but it doesn't mean you get to eat for free or to get food for whatever price you deem "affordable" -- otherwise it would be Communist Bolshevism which never did anything good on earth but only caused disasters and atrocities. Worse, not only the Individual Mandate does not protect anyone's right, it trespasses other people's rights by forcing them to pay for something they don't want. As Thomas Jefferson said, one person's right and freedom must not trespass another person's right and freedom. While believing it's a virtue for the young people to support the senior people who are poor, I don't think it's right to force to young people to pay for what they don't want, especially by adding more inefficiencies and bureaucracies in the equation.
3. The public sector in the US is fundamentally inefficient. By looking at how our DMV functions, how our public transportation functions, and how our urban ticketing/zoning works, or even NASA in the recent years, does anyone have any high expectation in the American public sector's ability to efficiently get something done and done well? Not saying it's impossible in the long run, but this is simply impractical in the foreseeable future. As I remember, the ObamaCare site/app was made with Ruby-On-Rail and spent billions -- by this performance alone, no honest person can say that ObamaCare could possibly lower the INTRINSIC costs of healthcare. For God's sake, who on earth would use Ruby-on-Rail to build a heavy and bureaucratic app with the mandated Waterfall approach by reading through tens of thousand pages of "AffordableCare Act"? (#Facepalm)

Both of the above 2 points are the core components of the ObamaCare, and thus no wonder why the vast majority of American people did not welcome the ObamaCare. Now, from the 1st Principle, let's see how we can INTRINSICALLY lower healthcare for the country apolitically. Let's start by listing the main reasons why healthcare in the USA is so expensive:

1. Legal and insurance costs for doctors and hospitals are too expensive: Like many other industries, lawyers and insurance for doctors cost a lot of money.
2. Medical schools are too expensive and taking many years: 8~10 years of each doctor's life, plus some 6-figure number of school bills after 4-year universities.
3. Drug prices are too high: The first part is that R&D costs and FDA approval time and financial costs are high. The second part is the monopolies and less liquid competitions driving the prices higher.
4. Hospital and clinic operational costs are too high: Real Estate, Utilities, Equipments, Labor, Regulatory costs etc.
5. Other red tapes and regulations that drive the costs even higher. More regulations and bureaucracies.
6. People do stupid things. For example, for many, eat extremely unhealthy diet, do drugs, or smoke. This drives up the total healthcare cost for themselves and for the society.

To save some space, I won't go in detail to prove to describe each of the 5 points above, after more than a decade of observations and thinking, though readers are welcome to discuss with me offline.

After listing out the main drivers of high healthcare costs in the US, here is the framework of a list of result-driven resolutions that I would propose, though I know that in a so called "democratic" process, or more transparently in a bureaucratic nature they won't ever turn into reality. Just for the sake of making a point of common sense, versus the Emperor's Clothes, here are the ways how I would solve this problem by starting from the easiest to the hardest:

1. To INTRINSICALLY lower healthcare costs on consumers, we must lower opportunity costs and financial costs for doctors. To achieve this, we can:

• Tax exemptions for personal income taxes for doctors and nurses, which together is not a significant portion of federal tax revenue anyway, much less than the money spent and wasted in ObamaCare bucreaucracies.
• Simplify legal procedures and lower insurance costs for doctor practice. Cap maximum the amount of financial reparation for unintentional mistreatment.
• Subsidize medical school tuition rather than subsidize patients. Intrinsically, each doctor can treat thousands and tens of thousands patients in their life time. It is less expensive for the government to pay for doctors' school costs upfront, which means to lower their upfront risks and costs, instead of pay for patients' costs later on. $200,000 for medical school means a lot to each of med student, but that amount goes very fast when government subsidizes any patient or pay for its own bureaucratic machine.
• Emphasize on specialties and trim the length of medical school. I won't go into specifics on this one, but I am confident that to a certain degree this can be done.

2. To INTRINSICALLY lower healthcare costs on consumers, we must lower drug costs. To achieve this, we can:

• Lower INTRINSIC drug costs by lowering the costs of FDA approval process and trimming the length of the process. I won't go into detail on this one, but I am confident it can be done after speaking with experts. (President Trump has been experimenting this approach to an extent.)
• Increase free market competitions between pharmaceutical companies as well as transparency in the market. I won't go into detail on this one, but I'm confident this can be done also. (The Trump administration has been experimenting this front as well.)

3. By common sense, to drive down costs of healthcare, just like every other industry, we must calibrate the Supply/Demand relation, by increasing the supply side of the equation. To achieve this, we can:

• Import doctors from other countries by 3 to 10 folds, and we have been doing this regarding nurses. It's no news that the US imports a lot of software engineers from other countries, especially India, Eastern Europe and China. If it works for engineering, there's no reason why it cannot work for medical industries. Doctors are the highest paid and best treated in the US among all large nations on earth. Thus if the government remove the red tapes and expedite the visa and immigration process for experienced and highly regarded foreign doctors, especially from English speaking countries, we can intrinsically lower the costs of doctors in both the production (educaton) process and the service (patients diagnosis and treatment) process.
• Promote low-cost generic drugs both domestically and from foreign imports. For most people, there's no reason have to have the "name brand" drugs for most illness. (The Trump administration has been experimenting on this front as well.)

4. Segment patients' illness severity and segment the type of doctors, clinic and insurance for each type of illness. Also segment patients based on their free choice of tier, similar to the PPO vs. HMO we have today, but more in detail. To achieve this, we can:

• The vast majority of people's illness are minor, which do not require the most expensive resources. Junior doctors or imported non-expert doctors, generic drugs, the baseline to get problems treated, is not something too much to expect. This is what people often complained about what ObamaCare does not do well at -- "paying thousands a year for insurance, still having huge deductibles, sometimes $10k or more, for getting "free" Tylenol." In a well structured free market healthcare economy, "People choosing tiers of services based on their will and affordability" and "Tiers of service choosing patients based on the severity of illness" can coexist. For the vast majority of ObamaCare "beneficiaries", imported doctors, residency/junior doctors and cheap generic drugs are sufficient for getting things done.
• Those who are willing and can afford luxury topnotch healthcare, can have what they want, and the resources such as doctors, facilities and drugs won't be distracted from serving the "mass public" or in simpler words "having too many patients" (like what we see in socialist countries such as Mainland China and Canada).
• Even though segmenting patients can result in some calling it "income inequality", we don't have and will never have the absolute equality in anything anyway. Those who cannot afford eating at Michelin Starred places can fill their tummies at McDonalds or get their groceries at Walmart. The same for healthcare. American healthcare is known to be the top quality in the world, but lacks affordability. By segmenting patients, the "poor" patients should at least be able to get the quality of healthcare similar to Canada or China, not necessarily for "free", but at least much more AFFORDABLE and INTRINSICALLY much less expensive without playing the "left pocket to right topic" kind of cognitive magic show; whereas the "wealthy" can still keep the quality of their insurance they love in a relatively separate "pod".

5. Open up and promote medical tourism for foreigners. As long as it's not some dangerously contagious disease, as long as our border is open, why not. America has the highest quality of healthcare in the world, and the emerging economics are having an increasing number of rich people while their own healthcare systems haven't caught up yet. By promoting medical tourism to other countries especially the wealthy in emerging economies, the revenue can not only lower the public costs of healthcare for American civilians, but it also helps the revenue for the federal government. If the universities can do it for international students, why not healthcare? Certainly medical tourism would only be for the higher tiers of healthcare, for being worthwhile for the foreign patients, and thus it wouldn't compete resources for the lower income people in the US.

6. Promote the export of topnotch new drugs and equipment to foreign countries for profit, and thus the "expansion" method. The US made many great deals selling Boeing and fighter jets to foreign nations in the past four years, and the government wouldn't have fundamental difficulties in making deals with foreign nations to sell new medicines and equipment for profit to compensate domestic healthcare costs. Certainly it's not a news for US pharmaceuticals to export American drugs to other countries, but there's a lot more to be done with the alliance between the public sector and the private sector.

7. The most powerful point of the framework in the long term is the #1 most INTRINSIC way to lower healthcare costs, and that's through innovation and advancement of technologies. The Internet and mobile solutions, which many startups have been pioneering for the past 10 years, with the Covid19 pandemic being a testing ground, are near an inflection point to make big differences. Specifically the "internet and mobile solutions" can be divided in the following 3 categories (I won't go in detail, as it's very easy to do basic research and find out):

• Remote Doctor consultation, diagnoses, prescription and followup.
• Self-Treatment via self-diagnosis apps and medical "wiki".
• Remote pharmacies and insurance services.

8. The last point of the framework is education of raising awareness of a healthy lifestyle. A vast majority of chronic illnesses in the US result from unhealthy life styles. Smoking, excessive alcohol, sugar, fried processed food, low quality carb... while I don't think it makes sense to ban them or regulate the consumption, education from a younger age through childhood can significant solve this problem. Although I don't exercise much, many have been asking me how come eastern Asians tend to stay healthy and live longer. While I cannot rule out genetic reasons, much of the differences came from diet differences. Educating children about healthy diet and life styles should not be labeled as "socialism", just like telling people not to smoke or do marijuana is not socialism. Common sense, reasons and consequences.

As I do not write this for a living, nor do I have the time to go into much detail to make it "academically acceptable", for the end goal of practicality I encourage you and those in the field to research, try, test and come back to tell me whether you think some of these solutions work or don't work well, and what you would like to suggest. Like how our Founding Fathers of this country invented our government, our healthcare system doesn't necessary to be entirely one way or the other, and definitely doesn't have to conform any type of political ideologies, to focus on nothing else but the end result of making healthcare accessible and more affordable for the vast majority of people, while not sacrificing the affordability for the middle class or the quality for the middle and wealthy classes.

As explained above, my solution of "making healthcare affordable" for the American people of all kinds can be described with the summary of:

• Use free market approaches to lower friction in the service cycle;
• Cut out red tapes and lower administrative overhead costs;
• Lower costs for doctors and pharmaceutical companies by lowering their upfront opportunity costs and financial costs;
• Increase the supply side of the healthcare equation; Segment the patients and treatments further;
• Use medical exports and medical tourism to pay for domestic healthcare cost deficit;
• Accelerate and support technological advancement and especially in mobile and internet technologies to increase the efficiency of diagnosis, appointments and pharmacies;
• Improve universal health education from a young age, which does not have to be at school.

The above are a summary of observations, thinking, and proposals of mine from a little bit over the past decade. While believing that the real difficulties behind the healthcare affordability problem in the US are bureaucracies, politics, corporate interests and all the indirect causation, I hope and I'm confident some of the proposed solutions will be picked up and put into reality by someone capable. At the end of day, I believe that every problem has a solution on this planet.